5 things to know before the stock market opens on Wednesday, May 4

Here is the most important news, trends and analysis that investors need to start their trading day:

1. Wall Street ready to go ahead with Fed decision after weak ADP data

Traders on the floor of the NYSE, May 3, 2022.

Source: NYSE

US stock futures pointed to a higher open Wednesday ahead of the conclusion of the Federal Reserve’s two-day May meeting, which will almost certainly lead to an aggressive 50 basis point interest rate hike to fight inflation. If premarket gains were to be caught closer, it would be the third straight positive session for the Dow Jones Industrial Average, S&P 500 and Nasdaq, the first since March.

  • The Dow rose 0.2% on Tuesday. The S&P 500 rose about 0.5% and the Nasdaq 0.2%.
  • On Monday, the first trading day of May, the S&P 500 hit a new 2022 intraday low before Wall Street rallied and closed higher across the board.
  • For the whole of April, October was the Nasdaq’s worst month since 2008. The Dow and the S&P 500 had their worst month since March 2020, the month the Covid pandemic was declared.

2. Bond yields rise as investors consider more aggressive Fed

Traders work as Federal Reserve Chairman Jerome Powell is seen commenting on the screen at the New York Stock Exchange (NYSE) on March 16, 2022 in New York City.

Brendan McDermid | Reuters

The benchmark 10-year Treasury yield ticked higher on Wednesday but traded below the previous session’s push to highs of December 2018 above 3%. The Fed’s May meeting ends at 2 p.m. ET and Chairman Jerome Powell holds his exclusive post-meeting news conference. 30 minutes later.

  • Respondents to the May CNBC Fed survey expect the central bank to hike rates again next month by 50 basis points as it also seeks to shrink its balance sheet. Survey respondents also forecast a recession at the end of the Fed’s tightening cycle.
  • Markets expect the Fed’s July, September, November and December meetings to raise rates by at least 25 basis points, such as the move in March, which was the first rate hike in more than three years.
  • ADP said Wednesday morning that US companies added 247,000 jobs, a much weaker than expected in April, as employers continue to struggle to find workers to fill open positions. ADP data has not been the biggest indicator of the government’s monthly payroll numbers, which come out on Friday.

3. Lyft, Uber sink after ride-hailing companies report spotty quarters

A sign marks a rendezvous for Lyft and Uber users at San Diego State University on May 13, 2020 in San Diego, Calif.

Mike Blake | Reuters

Shares of Lyft sank nearly 27% in Wednesday’s premarket, after the ride-hailing company said it would increase spending to attract more drivers, leading to further guidance that fell short of analyst predictions. First-quarter earnings of 7 cents per share beat estimates of a 7-cent loss. Revenue of $876 million also exceeded estimates. Lyft reported 17.8 million active riders in Q1, narrowly missing estimates and down from the fourth quarter’s 18.73 million.

Shares of Uber fell 9% on Wednesday morning after the ride-hailing and logistics giant reported a better-than-expected $6.85 billion in revenue during the first quarter. The company said it continues to recover from the pandemic and will not have to make a “significant” investment to keep drivers. Uber reported a net loss of $5.9 billion for the first quarter, primarily due to its equity investments.

4. Moderna blew earnings estimates; CVS Health raises its outlook

Modern COVID-19 Vaccine is prepared for administration before the free distribution of over the counter rapid COVID-19 test kits to people receiving their vaccines or boosters at Union Station on January 7, 2022 in Los Angeles, California.

Frederick J. Brown | AFP | Getty Images

Moderna sold $5.9 billion of its COVID vaccine in the first quarter, beating revenue and profit expectations. The company’s shares rose nearly 4% in premarket trading. On Wednesday, the biotech name maintained its full-year guidance of $21 billion in COVID vaccine sales. CEO Stefan Bunsell said he expects Moderna to book even stronger vaccine sales in the second half of the year as governments order more shots to prepare for fall vaccination campaigns.

A CVS pharmacy is seen in Bloomsburg.

Paul Weaver | LightRocket | Getty Images

Shares of CVS Health were up about 1.5% in premarket on Wednesday morning after the drugstore and profit management giant posted better-than-expected first-quarter earnings and revenue. CVS said demand for prescriptions rose as the first quarter saw more cough, cold and flu season. Sales of over-the-counter COVID testing kits helped results, but coronavirus vaccines and in-store testing declined. CVS also compiled full-year guidance.

5. Starbucks Suspends Guidance, Sweetens Perks Amid Union Drives

Starbucks President and CEO Howard Schultz speaks at the annual meeting of shareholders on March 22, 2017 in Seattle, Washington.

Jason Redmond | AFP | Getty Images

Starbucks shares rose 7% in premarket Wednesday, after the coffee company topped estimates for fiscal second-quarter revenue. Profit matched. Starbucks suspended its fiscal year 2022 outlook, citing lockdowns in China, inflation and investments in its stores and employees. Chinese same-store sales fell 23%. US same-store sales climbed 12%.

Starbucks said it would increase wages for tenured employees and double the training of new employees as the company and interim CEO Howard Schultz look to reverse unionization efforts. Starbucks will not offer much benefits to workers at the roughly 50 company-owned cafes who have voted to unionize. The company said such changes would have to be done through bargaining at Union stores.

— CNBC Samantha Subin, Jesse Pound, sarah mino, Vicky McKeever, strip dome, steve lizman, Jessica Burztynski, spencer kimball, Melissa Repko And Amelia Lucas contributed to this report.

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